A Greenspan in Reserve

By

Alan Abelson

Updated Feb. 19, 2001 12:01 a.m. ET

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C loning seems to be in the news again and, in particular, human cloning.

There's a predictable cycle in the-next-big-thing news stories. After the initial wave, there's a lull that gives way after some interval to a freshet of follow-ups. And cloning is adhering nicely to the script.

The sudden rekindling of media interest in cloning may be sparked in large measure by the burst of publicity about the human genome. In part, too, its origin can be found in epidemic journalism: When one rag or boob-tube outlet comes up with a story, the competition is immediately infected by an incurable impulse to, well, clone the story.

That great medical journal, Time, for example, devoted its February 10 cover to human cloning. Its elaborate takeout came hard on the heels of a cover piece in the New York Times Sunday magazine on the same subject and which, indeed, featured some of the same people.

The heading on the Time cover was "Human Cloning Is Closer Than You Think." We've got news for Time: It's here!

That stunning epiphany was inspired not by our third martini at lunch or the chance discovery of some secret lab tucked away in a hidden corner of Tennessee where twitchy, guitar-strumming researchers have been busily contriving to turn a lock of Elvis's hair into a living, breathing replica of the great man. Rather, it hit us like a bolt of lightning while perusing Alan Greenspan's testimony rendered to a gaggle of senators last Tuesday.

Alan Greenspan has been cloned!

No kidding. The evidence that there are two Greenspans is overwhelming.

Greenspan the Original, as we all know, viewed the enormous surge in capital investment quite benignly. Indeed, more than that, he hailed it with unconcealed enthusiasm as the agency of the productivity miracle, which we could only infer was providentially bestowed on this nation as reward for its impeccable monetary policy.

In last week's discourse with the senators, however, Greenspan the Clone declared authoritatively, as if it were as plain as the nose on your face, that growth in capital spending by consumer-durable and business-equipment makers had reached unsustainable rates, and that while "high-tech demand was doubling and tripling annually...new supply was coming on even faster." None of the assembled solons had the wit to say to him, "So, now you tell us?"

Three weeks ago, Greenspan the Original reported that the economy had ground to a halt. But Greenspan the Clone last week said, not to worry, the economy's recovering (how could it not be after such timely action by the Federal Reserve?).

Greenspan the Original viewed the budget surplus as sacrosanct, a treasure to be zealously husbanded and used only to get this proud land free of the yoke of debt. Greenspan the Clone, in sharp contrast, moans that the surplus poses an awesome problem: What do we do with the money when there's no more debt to pay off? Ever since he posed the irksome question, frankly, we haven't been able to catch a wink of sleep.

Although identical physically and in demeanor and expression, and alike afflicted by a certain myopia (the Original couldn't see a bubble, the Clone can't see a recession), the two Mr. Gs, as all the foregoing suggests, can be wildly divergent in their perceptions and reactions. Obviously, the guys in the white coats didn't get the cloning quite right. No knock on them, really, the technique's still in the development stage.

The cloning of Mr. Greenspan was a huge, hush-hush national-security rush job comparable to the Manhattan Project that produced the first atom bomb. Its secret code name was Operation Punch Bowl.

The cloning idea was conceived in that golden era when Mr. Greenspan enjoyed universal reverence and acclaim, and fear arose among the powers-that-were that some evil terrorist or crazed day-trader might take him hostage and create economic turmoil. The recent public appearances of the Clone are a kind of tryout. We'd say, given the odd tenor and content of his utterances, he ought to be sent back to the shop for some fine tuning.

As Jim Grant wonderfully remarks, after noting Mr. Greenspan's cheery reference in his Congressional testimony to a survey of more than a thousand security analysts showing their three-to-five-year projections for profits to be quite high, "When the Federal Reserve is optimistic because brokerage employees are bullish, there must be trouble."

I nstead of conjuring up hope from the bleatings of analysts, the chairman would be better advised to study the little graphic that adorns this page. It's the handiwork of Ed Hyman's IGI Group and depicts the melancholy rise in new claims for unemployment insurance.

As Ed points out, the last time that lugubrious total reached these levels was back in 1990, at the start of a recession. And given the gathering tsunami of layoff announcements, which further swells with every passing day, the trend seems to have nowhere to go but up.

Jobs and profits are the meat and potatoes of the economy. They're the stuff that makes or breaks confidence of consumers and business, respectively, and both are on the skids (consumer sentiment in February, the latest reading shows, is taking another header). And whatever the three-to-five-year outlook, the three-to-five-month prospects are definitely bleak for employment and earnings.

Nor are the bright housing numbers for January -- starts up 5.3%, permits up 12.6% -- necessarily a harbinger of better times ahead. The eagerness of homebuilders to build, whetted by lower mortgage rates, will prove greater, we suspect, than the willingness of consumers to buy.

Mounting layoffs, after all, are not the ideal backdrop for housing. As our friends at Bridgewater Associates point out, the latest figures on both mortgage applications and consumer plans to buy a house are decidely unencouraging.

On this score, as someone pointed out at lunch last week, an awful lot of undoubtedly fine people have wantonly leveraged the equity in their houses and used the cash, often as not, to maintain a standard of living neither their income nor Nasdaq has been supportive of lately. To these bloodshot eyes, that also holds some potential to mess up the neatly sanguine calculations on housing.

The other significant economic news on Friday -- we're ignoring the PPI stuff because one-month's data don't tell you much except what happened in that one month -- was further notice that the smokestacks aren't smoking with their old-time gusto. Capacity utilization continued its sorry decline, dropping to 80.2%, the lowest since August of '92, when industry was just beginning to shake off the recession that did the President's daddy in.

As someone once said, if it smells like a recession, looks a recession and acts like a recession... .

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